The American Tailwind

Reflecting on the 77 years since making his first investment at age 11, Warren Buffett wrote in his 2018 letter to Berkshire Hathaway shareholders:

 “Charlie and I happily acknowledge that much of Berkshire’s success has simply been a product of what I think should be called The American Tailwind. It is beyond arrogance for American businesses or individuals to boast that they have “done it alone.” …

There are also many other countries around the world that have bright futures. About that, we should rejoice: Americans will be both more prosperous and safer if all nations thrive …

Over the next 77 years, however, the major source of our gains will almost certainly be provided by The American Tailwind. We are lucky—gloriously lucky—to have that force at our back.”

 Though Mr. Buffett is now retired, his words are a refreshing reminder that we live in a remarkable period in history. As our nation marks 250 years, it is worth reflecting on the principles of freedom and personal responsibility that helped lay the foundation for an economic system capable of supporting generations of innovation and growth. Leaders such as George Washington, Alexander Hamilton—our nation's first Secretary of the Treasury—and many of the founding fathers helped establish institutions that continue to create opportunity for businesses, investors, and society.

Over time, that system has rewarded generations of innovators while giving all of us, as investors, the opportunity to share in their success. Thankfully, this tailwind is accessible to all of us. The stock market is not a slot machine of risk and reward. It is simply a collection of businesses that create products, provide services, employ people, and grow. As investors, we become part owners of those businesses. The best-managed companies innovate, adapt, and create value for their shareholders. Those that don't are replaced by businesses that do. That ongoing renewal has long been one of the great strengths of our market economy.

The idea is simple. Living through it rarely is. Capturing the long-term returns of the capital markets requires discipline, patience, and a thoughtful investment process. This is especially true in a world filled with headlines about wars, inflation, trillionaires, and fears of market bubbles.

We don’t react to current events, whether economic, financial, geopolitical, or otherwise. To capture the full longterm returns of our global equity portfolio, we must remain fully invested through both “good” and “bad” markets. Downturns are inevitable, but as we've said many times, we've prepared for them—and frankly, we expect them.

There has rarely been a more eventful twelve-month period in our experience. A major war, disruption in energy markets, inflation, higher interest rates, equity valuations near historic highs, extreme market concentration, Bitcoin's sharp decline, and one of the largest IPOs in history (from a commercial space company, no less). Have we left anything out? Even so, long-term investors have continued to be rewarded. Those with globally diversified portfolios, like ours, have benefited even more.

So, as Mr. Buffett reminds us, stay the course. The headlines will change, but the principles of disciplined investing endure. May the American—or perhaps we should say global—tailwind remain at our back.

Your friends at Fort Vancouver Investment Management, LLC